Strong investment of US$8.7B in Q4’17 propelled global fintech funding over the US$31B mark for 2017, sustaining the high level of investment seen in 2016, according to the KPMG Pulse of Fintech report. This brings the total global investment in the fintech sector over the past three years to US$122B. While global fintech deal volume declined in Q4, the number of venture capital (VC) transactions exceeded 1,000 for the fourth consecutive year in 2017, with private equity (PE) deals reaching a new high of 139. Fintech M&A also ticked up for the year with 336 transactions in 2017.

Among fintech sub-sectors, both insurtech and blockchain saw record levels of VC investment and deal volume in 2017, with insurtech accounting for US$2.1B across 247 deals and blockchain generating $512M of investment across 92 deals.

Jalil AlAali, Partner and Head of Financial Services at KPMG in Bahrain commented on the report and said “The fintech industry is continuing to evolve and advance in Bahrain and worldwide. In the digital era we live in, technology is no longer an added-value but a necessity shaping the customers experience.  Corporates and financial institutions, which are looking to expand and grow, are no longer experimenting with fintech but rather seeking out value-driven opportunities.”

According to the report, the US accounted for almost two-thirds of global fintech investment in Q4’17, with $5.8B in funding raised, and almost half of the full-year 2017 global total, with US$15.2B raised for the year. M&A accounted for the majority of this funding, with US$8.7B in deals in 2017. US PE funding in Q4’17 achieved its second highest quarter ever at US$3.4B.

Fintech investment in Europe reached over US$2B in Q4’17, with VC investment achieving a new record of US$960M – while total investment for 2017 reached US$7.44B. In Asia, fintech investment moderated to US$748M for Q4’17, to reach only US$3.85B for all of 2017, after more than US$10B in funding in 2016.

In Asia, fintech funding was US$3.85 billion in 2017 – a massive drop-off from the more than US$10B invested in 2016. Decreased fintech investment in China accounted for much of the decrease in investment in Asia. China saw just US$45.8M in investment in Q4’17, while total investment in 2017 was US$1.33B.  On the positive side, corporate participation in fintech deals skyrocketed in Asia during Q4’17, rising from a twelve-quarter low of 11 percent in Q3’17 to reach a new high of over 31 percent.

Key 2017 annual highlights

  • Total global fintech investment was US$31B, the same level of investment as 2016.

  • The number of PE deals reached a record high of 139 in 2017, providing US$17B in investment.

  • 2017 saw the third-highest annual total for VC fintech investment of the decade.

  • The median deal size for angel/seed-stage deals was up to US$1.5M, compared to US$1M in 2016, while the median deal size for early-stage rounds was also up to US$5.5M from US$5.1M in 2016. The median deal size of late-stage deals decreased year-over-year, from US$19.1M to US$16M.

  • Corporate participation in VC deals reached a record high of 19 percent in 2017, although corporate VC investment globally was down significantly year over year, with just US$5.4B invested in 2017 compared to US$9.6B invested in 2016.

For more information, contact:
Afrah Faraj
Marketing and Communications
KPMG in Bahrain
afaraj@kpmg.com 

About KPMG Fintech

The Financial Services industry is transforming with the emergence of innovative new products, channels and business models. This wave of change is driven by evolving customer expectations, digitalization, as well as continued regulatory and cost pressures. We are passionate about supporting clients to successfully navigate this transformation, mitigating the threats and capitalizing on the opportunities. KPMG Global Fintech comprises professionals in over 35 fintech hubs around the world, working closely with financial institutions and fintech companies, to help them understand the signals of change, identify the growth opportunities and to develop and execute on their strategic plans.

About KPMG International

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 154 countries and territories and have 200,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such

© Press Release 2018